MUMBAI, Jan. 7GROWTH in the over 40-year-old Indian biscuit industry has remained slow. Back-of-the-envelope calculations will show that per capita consumption is less than Rs 3 permonth on biscuits or less than Rs 15 per household per month.This is according to a study done by Market Search, a Mumbai-based market researchagency which has attempted to explain the dynamics of the Indian biscuit market.Having just two national players, Parle and Britannia, the prices have remained almostconstant for the past few years in most categories and in some categories the priceshave actually decreased to 1997-98 levels. As per the study, the market is even nowdominated by basic biscuit categories such as Glucose and Marie which `aim to satisfyhunger' and have little success in moving up the value chain. The bottomline is that thebiscuit market seems reluctant to move up the value chain. Tracking the factors holdingback the growth of the biscuit industry in India, Market Search has arrived upon thefollowing points:

D

isguised monopoly

- Although at all levels there are just two major players, Parleand Britannia, a closer look at the State-level markets show the presence of strongregional players such as Bakeman's, Priya Gold, Shalimar, Windsor and Champion -brands present in almost all markets. Thus for the two national players, each Statemarket is similar to a perfectly competitive market, each with its own dynamics.The competitive scenario at the national level is more of a disguised duopoly than a realone. This has held the prices in check for a long time.

Freebie-driven purchase behaviour

- A slew of successful gift offers/schemes fromthe biscuit marketers over the last two years has led to a situation where the choice of brand is driven by the gift solely and not by the brands. More and more marketingbudgets are being spent on below-the-line promotions and less on brand building.According to the research, the delivery efficiency of schemes and gift offers in IndianFMCG markets is just about 60 per cent, leaving the rest of the potential customersdisappointed with the brand.Apart from the long-term damage to the brands, these gift-laden schemes have starteddamaging the brand in the short term and even the indifference of their distributionchannels at times leads to pilferage of these gifts.

Superior packaging

- However, biscuits' packaging has undergone a swifttransformation. From Britannia's functional protective blister wraps, which preventbreakage, to Parle's stylish and enticing BOPP offering, packaging has been completelytransformed. Both the players are now trying to differentiate their brands to reflecttheir superior quality through superior packaging.